How to Prepare Financially for 2021

December 25, 2020

In today’s post I will be sharing ways you can prepare financially for 2021.prepare-financially-2021


Before I move on to today’s topic, allow me first to say my sincere apologies for being missing-in-action on this blog. It has been a crazy month of November and December for me. Both months were filled with personal and work-related events.


To make it up to all of you, I will be posting a new post every other day for the final week of 2020.


In this post, I will be sharing a timely topic especially if you are aiming to make changes on your finances this coming new year.


Conduct your Year-End Review


The very first step in preparing financially for the new year is to conduct a year-end financial review.


A year-end review will help keep track of where you are right now in terms of your finances and all the progress you made towards your financial goals. How to conduct your own year-end financial review:


First, re-evaluate your goals – If you set your goals at the start of the year then you can revisit each and review the status. What goal/s is/are done or accomplished already? Is there any goal that’s not relevant anymore?


Second, review your spending habits – Find out who and how you are when it comes to spending your money lately. Are you saver or spender? Do you spend more on your needs or your wants?


Third, work on your side hustle – Think of a passion project you can do on the side in the next six months. If you already have a side hustle, think of new goals you can set for yourself.


Lastly, calculate your year-end net worth – Net worth refers to the difference between your total assets and total liabilities. Your year-end net worth is the very number you will be working on as the new year starts. It is important that you have an idea how much this amount is so you’ll know exactly how healthy you are financially.


Releated reads:

2019 Year-End Review

2018 Year-End Review

2017 Year-End Review



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Set up your Annual Budget

Next step to prepare financially for 2021 is to set up an annual budget.


Most people approach the new year without doing an annual budget for their finances. What they do is attack the new year month after month instead.


However, one good way you can get ahead is to prepare a year in advance. A budget after all is just an estimate of your income and expenses over a period of time.


There’s no harm to set up one for the rest of year.


How do you do your annual budget?


Record your Projected expenses


Take note of what your expected expenses for the new year will be. This is super important and something that I will encourage you all to do. Most fixed expenses doesn’t really change that fast and you will still pay the same amount next year.


For example, you can write down your electricity bill, phone bill, water bill, phone plan and your internet connection expense and how much you will normally spend for each. You can also include family member’s birthdays and how much you want to budget for gift. You can also prepare in advance should you wish to give yourself a gift next year for your birthday.


Take a record of your projected expenses for the coming year based on what occurred in the past. It would also be ideal to take the sum of the projected expenses on a monthly basis.


Record your Projected income


Take a record of the amount you expect to make every month based on what happened in the past year.


Study your paycheck and take a record of the average payment you make bi-monthly. You can also take note of any scheduled bonuses you receive at work. It could be your medical allowance, 13th month, etc.


As you do this task you will be able to estimate whether you are living below or way above your means.


You can base this on the sum of your projected expenses every month and how much income you are supposed to get.


If your expenses are less than your income, you're in the right track. However, if your expenses are way above your income, you'll need to go back and figure out where you can ruthlessly cut-off.


Establish your Money Goals for the New Year

Now that you have reviewed your year and made a projection for the expenses of th new year, it’s time to set some money goals for the new year.


This is one way you can prepare financially for 2021.


How do you establish money goals you can actually achieve.


First, make a list of broad resolutions you want to make. What areas in your financial life do you want to improve on?


Below are some examples:

Increase your income

Keep a budget

Increase your net worth

Live below your means

Pay off debt

Save more

Start a side hustle

Be more organized in your finances, etc.


Once you have the main areas defined, it’s time to make each as specific, measurable, attainable, relevant and timely. This will ensure that the resolutions does not remain a wish list. Instead, they will be smart goals you can work on for the whole year.


The most important lesson I learned when it comes to establishing smart goals, whether it be on finances, personal or work, is to add a numerical value with them.


There has to be a number and not just a bunch of letters on your goal.


For example, instead of just leave below your means – keep my expenses to less than Php 12,500.00 a month. Another example is instead of just save more, write down – Save Php 24, 000 as additional emergency fund in 2021.


Having a numerical value in your will make it easier to track your progress. It also makes your goal much more attainable.


Related reads:

10 Smart Financial Goals to Set This Year

Financial Goals I Want to Hit Before 30

How to Achieve Your Travel Goals in 3 Steps

Specify your Annual Financial Action Plan

Based on the the result of your financial review, your annual budget overview and your goal setting, it’s now time to specify your action plan.


The action plan answers how you will achieve each and every financial goal you have.


Let’s take for example the major goal at the end of 2021 of saving Php 24,000 as additional emergency fund.


Your action plan can be like this –


I will automatically save Php 1000.00 every paycheck.


Another goal you may have is to start investing Php 25,0000 in stocks by June 2021.


Your monthly action plan will go something this:

January – Research on primary resources to learn about investing stock market.

February – Spend 1 hour each day studying about stock market

March – Continue studying about stock market

April – Compare brokerage accounts by reading reviews and researching online

May – Open a brokerage account

June – Start invest


As early as January 2021, your action plan must include as well saving up money for your planned initial investment. Thus, if you wanted to invest Php 25,000 you don't save that money when June arrives. 


You divide the Php 25,000 for the months before the month of June happen. And so, your action plan will have the addition of saving up Php 5,000 every month.


This way, saving up for the initial investment won't be a burden for you anymore. By June 2021, all you have to do is start your investment journey.




Define your Investment Plan and Schedule

If you are already investing, you may want to define your investment plan and schedule next year. You want to be more organized with your investment plan and schedule from how much you will be investing, how frequent you will be investing and to where you will be investing your money.


Study your investment allocation and see where you can improve. Is it time to invest more on equities or bonds? Do you need a new investment vehicle to try out to achieve your goals?


Related reads:

3 Best Investment Strategies for Beginners + A Look at How I Invest my Money

Investment Options You Can Try with Your Bank

Determine How you will Grow Your Net Worth

At the end of the day, the most important metric to know how financially healthy you are is your net worth. Your net worth should be growing positively as you grow older.


Prepare financially for 2021 by determining how you will grow your own net worth as well. How much increase in net worth would you like to happen next year? What are you prepared to do in order to achieve that increase? Do you need a side hustle?


Final Notes from SavingsPinay

I know how many goals this 2020 have been paused due to pandemic.


However, we can’t let the pandemic have more power over of our life. It is still important to set goals and to prepare financially no matter what. Even if those plans may not be fulfilled, the most important thing is you have a guide you can find motivation with.


Remember these as you prepare financially in 2021:

Conduct your Year-End Financial Review

Set up your Annual Budget

Establish your Money Goals for the New Year

Specify your Annual Financial Action Plan

Define your Investment Plan and Schedule

Determine How you will Grow Your Net Worth


Here’s to an amazing 2021 for our finances!



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Clariza Glino

Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at, a beauty and lifestyle blog for frugal Pinays and manages,, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at

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